Suppose that q=40, L=5 and K=25 is a point on the production function q=f(L,K).

Question

Suppose that q=40, L=5 and K=25 is a point on the production function

q=f(L,K).

Is it posssible for q=40, L=55, and K=26 to also be a point on this production function? Why or why not?

The combination q= 40, Lequals=5, and Kequals=26

A.can be a point because we assume production functions hold technology constant.

B.cannot be a point because we assume production functions represent the short run.

C.cannot be a point because we assume production functions are comprised of fixed inputs.

D.cannot be a point because we assume production functions are efficient.

E.can be a point because we assume production functions exhibit diminishing returns.

Explanation / Answer

Since the output is also constant, it is more efficient to use less units of inputs into production. If the same output can be produced using less units of capital (K), then it is inefficient to use an extra unit as it will only add to the cost and not to the revenue.

Thus, adding another unit of capital (K) is not required and inefficient because earlier the same was being produced using a unit less than this input mix.

Therefore, the correct answer is option d. cannot be a point because we assume production functions are efficient.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.